Fred Clark on the Cost of Being Poor

Last year, U.S. banks collected about $36 billion in overdraft protection fees. This year, they expect to transfer about $38.5 billion out of customers' accounts in the form of such fees.

$38.5 billion. $105 million every day. $4.4 million every hour. $73,250 every minute. More than $1,200 a second. Transferred directly from the poor to the rich.

$38.5 billion.

And by the time he says,

The point here, I suppose, is that check-cashing fees may be an exploitative scam run by sleazeballs, but that they may turn out to be a more prudent option for the working poor than the even-more exploitative scam run by the more mainstream, but sleazier sleazeballs of the banking industry.

… the banks look far more exploitatrive than Wal-Mart charging $3 to cash a check.

5 Responses to Fred Clark on the Cost of Being Poor

When I was a legal aid lawyer, overdraft fees were smaller, but very few of my clients had checking accounts. We had a paralegal who handled a lot of our bankruptcy work, and she told me the signs to look for to determine what kind of financial trouble a person was in. For example, if a client did have a checking account, our paralegal looked to see if that client had bounced checks to a grocery store. If so, that client was in very serious trouble. That client had first priority for services from our office.

How is this the cost of being poor? It’s the cost of spending more than you have. This country doesn’t have a problem with poverty, it has a problem with irresponsibility. Not exactly shocking considering the lessons being handed down from DC….spending more than you have is a religion up there

My bank gives me a no-fee account with free checking (but a lousy interest rate) for keeping a minimum average balance. You have to have the savings to keep that balance; you don’t if you are living on the edge, which *isn’t* the same as ‘living above your means’.

It’s the cost of being poor because poor people have to work on terribly narrow margins, so they have to do everything involving money with a terrible degree of attention that is hard to sustain. I’m sure that when you make an ATM withdrawal from your bank account you have a general idea of how much is in the account, but do you always know the *exact* amount? A poor person has to.

Anyway, never even mind check cashing storefronts: I’ve heard some very poor people say they can get better rates and more respectful treatment from an illegal loan shark.